What in the world is long term capital loss carry over. i never heard of this.

[careywcate]

what is long term capital loss carry over?

[MarilynG1]

Carryover losses on your investments are first used to offset the current year capital gains, if any. 

You can deduct up to $3,000 in capital losses ($1,500 if you're Married Filing Separately).

Losses beyond that amount can be deducted on future returns as a capital loss carryover until the loss is all used up.

Here's more info on Capital Loss Carryover. 

@careywcate 

[careywcate]

I don’t understand this definition. Can you tell me if it is the dollar amount my 401b dropped in this current market loss. But I am not collecting on it so is it a loss?? When it increased it wasn’t a gains was it??? I have never collected on it yet. So how can it be a gain or loss? Is it simply that my balance is down by 20000 in this bad economy of late?

[LindaS5247]

This would not have anything to do with your 401(K) or 403(b) Plan, if that is what you are referencing when you say your 401b dropped.  

Did you sell a home or other property that you reported on your tax return, or did you hold investments that were sold and reported of your Form 1040, that showed a "long-term capital loss"? 

It would have to be with respect to a capital asset you sold or your investments reported on Schedule D, are showing a loss that is greater than allowable by the IRS, so it is carried over to future years.

Capital assets include property held for personal use (such as an individual's home, automobile, furniture, jewelry) and property held for investment (such as stocks, bonds).

When you sell a capital asset, the difference between the adjusted basis in the asset and the amount you realized from the sale is a capital gain or a capital loss.

If you held that assets more than a year it would be a long term capital gain or loss if you held the assets for less than a year it would be a short term capital gain or loss.

Capital loss carryover is the ability to use the capital loss tax deduction over multiple years if the loss is large enough. This means you can use the capital loss to offset taxable income. The IRS caps your claim of excess loss at the lesser of $3,000 or your total net loss.

If the capital loss is from investments it would carry over from your Schedule D and to Form 1040, Line 13.

Click here for additional information on Capital loss carryovers.

Click here for "How to Enter my Capital loss Carryover?"